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How Fast can you Close Deals?

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When I’m asked a question like this I immediately start to wonder if this prospect is the right fit.  Why are they asking this question?  I get it, you’re looking for Return on Investment, I understand completely, you’re putting out money and you want to know the value of what you’ll receive in return and here’s the answer…I don’t know yet.

Let’s face it sales can be a bit of a crap shoot.  Anyone who guarantees you increases in sales/revenue at “x”% is without question lying.  A couple things we need to consider:

 

  • What’s your currently sales cycle?  Why is it that long?  Are there challenges that contribute to the length of the cycle or is it just that long?
  • Who is your potential buyer?  And why?  How do you connect with the potential buyer currently?
  • Do you have a presentation or marketing materials?
  • How do you price?
  • Who’s your competition?  What do they do really well?  What’s unique about you?

Many of these questions may seem silly but here’s why I ask:  We can typically shorten the time it takes to get to a decision maker but the sales cycle is the sales cycle.  You should not expect any major changes to the amount of time it takes someone to close a deal just because you’ve hired an outsourcing firm.  That being said it’s not uncommon for us to close deals in half the time it takes you but for others it may take longer.  It depends on the complexity of the deal, the process necessary to get the deal complete (RFP, multiple decision makers, large vs small deal, etc).  We find that many of our clients don’t have a strong grasp of their target market or they target someone they want to be a client but will never be one.  We find that many of our clients have little marketing materials that are usable while others have too much and it can become confusing for the prospect.  We don’t rely on marketing material but it can be a good conversation starter so it’s certainly helpful if done right.

When we ask you about your competition there’s nothing that drives me more insane then hearing you say “Well, our people are smarter and our service is better.”  As if your competition would actually say, even if it were true, that they hire below average staff and their service stinks.  This is the equivalent of telling your prospect “blahblahblahblahblah”.  What makes you unique, if you don’t know, it’s time to figure it out or you can forget competing – you’re essentially making yourself a commodity and now it’s all about price.

Pricing.  Oh pricing, it can be the devil in this relationship.  I can’t tell you how many times I’ve taken a prospect into a decision maker for a deal that would double the revenue of their company only for them to price the project so far out of the realm of possibility that the prospect is literally in shock.  They loved you, you came highly recommended, they felt you could deliver and make them shine like the rock star they are and you blew it with cocky aggressive pricing and then you blamed me for losing the deal.  Here’s the deal, when it comes to closing with outsourced business development, it’s a partnership.  You rely on us to ensure you have a qualified lead, a decision maker with a budget and a strong connection either personally or professionally.  We rely on you to showcase your value, deliver high quality and always on time, and to price competitively.  We can go to bat for you if you’re within reason but if you’re off the mark, there’s nothing we can do to help.  In fact we’ve probably damaged that relationship by bringing you in the door.

So how fast can we close deals?  I don’t know, it’s different for every client.  Some happen within the first 2 months while others can take a year or two.  If you’re not viewing business development as an investment in your company’s future then perhaps it’s not right for you at this time.  If you’re counting every dollar and every minute that goes by you’re not seeing the forest through the trees.  Business development is about building the relationships that are going to change your business and when was the last time you built a long lasting, happy client relationship over night?

Prospect Rant #6 My BUSINESS DEVELOPMENT person is NEVER in the OFFICE

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Rant #6 My BUSINESS DEVELOPMENT person is NEVER in the OFFICE!

Time spent in the office – now this one cracks me up.  “I never see them; they only stop in the office for a few minutes at a time then head right back out the door.”  If you’d like your BD person to sit in the office and play spider solitaire then you are wasting a lot of money, they are supposed to be out – meeting new people, holding meetings, creating partners, etc.  The last thing you want them to do is sit IN the office.  That being said if you have not created some type of communication system or accountability system then you may have a problem on your hands.  We’ve created a communication structure with our clients that allows them to be kept up to date and keeps us from having to fill out huge spreadsheets or databases.

Asking a Business Developer to spend time filling out spreadsheets is a colossal waste of time and most of them won’t do it anyway – it really goes against their core nature.  You do however need to be kept up to date in a reasonable fashion to ensure the pipeline is moving forward.  I would suggest an easy to manage CRM or communication structure.

The bigger issue is if your BD person IS ALWAYS IN THE OFFICE – then they have nothing to do …and that’s a real problem.  I find that most CEO’s struggle with the concept that this person should be out all day and yet when they are in the office, because they are usually a lot of fun no one notices that maybe they aren’t doing what they should be doing.  This BD role can also create challenges within the office – some employees may get upset that this person “gets paid for eating lunch and going to happy hour” so be mindful of the internal sabotage.  Part of this person’s role is to create relationships and that typically requires lunches and happy hours to network, with prospects or with clients.

Prospect Rant #5 – They said they had connections

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Rant #5 – They TOLD ME they had great connections

It’s now 6 months later and we have no meetings scheduled.  I have to admit I love this one because it can happen across the board.  It can be your $225k hire, the retired military leader, the retired Agency head, the “commercial expert” or the newbie, etc.  You’re paying for action not cards in a rolodex.  How many former executives do you know that actually handled the sales process?  Not too many – so why would you expect them to do it for you?  You hired them for one reason and one reason only – to make introductions for you and now in order to see your investment flourish you need to pair them with someone who can communicate the opportunity and move the opportunity forward.

It can also happen with your in-house Business Development person, anyone can say they know people and how many CRM’s are filled with names and numbers that represent a person they met once at an event 5 years ago?  Again Business Development is about connections, strategy and execution.  You’re looking for someone who can figure out the puzzle, methodically go about meeting and meeting with your desired prospects, communicate in the most effective way the value that prospect would receive in working with you and moving that prospect along the pipeline IF they are the right fit.  The last thing you want is someone trying to cram a square peg into a round hole.  You want right fit clients and you need the person who is willing to walk away from a deal if in the short or long run they know it’s not going to work.  The frustration and potential damage to your reputation just isn’t worth a few months of revenue.

Let’s be honest, sales is a crap shoot.  There really is no way to tell if someone you interview really has strong connections or not (unless of course you’ve seen this person in action over a long period of time).  There’s also no way you can identify their strategic capabilities or their desire to execute.  What does work is communication and accountability.  This in no way implies you should be a micro-manager however there does need to be a standard for how information is delivered to you and vice versa.

Rant #4 What’s with all these expenses?

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As you know from reading out last couple of blog posts we’re listing all of our prospect rants – what brings them to us initially.  Today’s is all about expenses and unfortunately most business owners don’t take into account the expenses associated with business development which ultimately leads to a much higher budget item then originally planned.  Keep reading to get a greater understanding of the full budget challenges:

 

Rant #4 – what’s with all these expenses?

 

What’s with all this expense reimbursement?  So Business Development is not just salary, commission, benefits and taxes…it’s also expense reimbursement and you should plan for a minimum of $30,000 if you hire someone full time.  Here’s what we typically see:

  • Mileage – at or near the IRS reimbursement rate, you should expect 800-1500 miles on average per month
  • Memberships – some groups are $35 a year while others are $30,000, you’ll need to determine a budget and which groups fit your target profile
  • Event fees – typically range from $30-400, including fees for appropriate trade shows which could be upwards of $2500
  • Phone reimbursement – typically capped at a monthly number or fully paid for by the company and may be company equipment
  • Parking and tolls
  • Taking clients/prospects/partners out to breakfast/lunch/dinner/drinks

 

When I was employed in a BD role years ago, my monthly expenses averaged $1200-2000 and that didn’t include the memberships…this was also over 5 years ago.  If you decide to hire full time you should plan for expenses and budget, be sure to discuss this budget with your BD staff.  I’ve had corporate credit cards and I’ve had to deliver expense reports biweekly.  For those that travel outside of the region you should expect flights, trains, rental cars, hotels, per diem as well.  This would also be the case if you need to attend a conference out of the area.

I’ve found that most BD outsourcing firms cover their expenses in house with the exception of out of the area travel which is typically only if requested and approved by the client ahead of time.  So typically if you use an outsourcing firm for business development its one flat rate monthly plus commissions.  We have seen some outsourced firms bill for expenses so if you’re in conversations it’s important that you know what you will and will not be responsible for and for how long.

 

Prospect Rant #3 – Cheap Labor

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Continuation of the Bob London of London, Ink “Customer Rant”  posts, see previous posts for more information.

 

Rant #3  I should be able to hire someone for $30k right?  If they’re really good they’ll make it up in commissions

Here’s the issue, the good ones know their value and $30k is an insult.  You are essentially asking someone with 15+ years of experience with amazing connections that they are essentially going to drop in your lap, someone with a strategic mindset who can build and manage long term relationships and make you look like a genius to accept the equivalent of $15 per hour.  Here’s what $30k will get you – $30k will get you someone extremely junior who requires a lot of training and mentoring – aka no commissions coming in any time soon.  I’m certainly not saying this is a bad idea – for some it’s a perfect fit – you want to look for a real go getter, someone with a lot of energy but just know they will require a lot of time and energy on your part for training and eventually will leave you at some point for more money.  My friend Andy Miller of Big Swift Kick just loves when prospects ask him to work on a success fee only structure.  His answer is simply perfect, he says “sure, I’d love to.  We’ll just have to make sure the contract is buttoned up and I’ll need 3 references of people who have worked on a success fee with you before where you’ve actually written the big check”.  Look this isn’t our first rodeo, we’ve all been asked to do this before and we’ve all said yes and we’ve all been screwed.  There are a couple of issues at play here:

  • We don’t necessarily have access to all your systems so we have to trust that the numbers we see in the end are correct and you actually have to abide by your word and write the check
  • There’s a difference between an increase in sales revenue and an increase in profit.  If you add to the expenses at the same time sales are increasing your profit may actually shrink and it wouldn’t be the first time someone has tried to hold us accountable to their inability to manage expenses.
  • You need to give us free reign and most CEO’s aren’t willing to let us control all aspects of their sales environment including terminating those who may be a hindrance.
  • More so than any of the others, you aren’t taking this seriously.  The CEO who is serious about growing their business understands investment.

 

 

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